The Small Business Administration (SBA) 7 (a) loan is the most popular type of SBA funding. It is the go-to option for many businesses because of its low interest rates, long repayment terms, and flexible loan usage clause. To receive an SBA 7 (a) loan, businesses must partner with the SBA and a certified development company (CDC). The CDC will provide 40% of the loan value, while the borrower will need to pay a 10% down payment.
Startups can also qualify for an SBA 7 (a) loan if they have previous experience, a good personal credit score, and are willing to pay a larger down payment. The SBA CapLines program is another option for small businesses that need short-term working capital. This program offers lines of credit to meet cyclical and short-term needs. It can also be used to purchase inventory or support export sales. Women-owned businesses can also take advantage of SBA loans for general business expenses, commercial real estate purchases, construction projects, and small funding needs. To qualify for an SBA 7 (a) loan, businesses must meet the SBA definition of a “small business”, operate in the United States, use the funds for a sound business purpose, and not owe money to the federal government.
Companies must also have two years of business activity to qualify, although this requirement can be waived in some cases. When applying for an SBA loan, businesses must work with an SBA-approved lender in their local area. When applying for an SBA loan, businesses may need to make a down payment of 10% to 20%. The approval process may take a few weeks unless the lender has preferential status. There are several types of loans under the 7 (a) program that meet different needs such as the SBA Express for faster delivery times or seasonal and short-term financing options that use an SBA line of credit.
